The City Council on Monday will consider approving a $3.5 million settlement in suits against two surety bond companies. The deal, if approved, will net the city about $2,625,000 after attorney costs.

The case stems from an effort last year by the city to foreclose on about $20 million in performance bonds from Travelers Casualty and Surety Company of America and Chubb Group Insurance Cos. The bonds were issued in 2003 to LandMar Developers for infrastructure at Southern Hills.

When LandMar filed for bankruptcy in 2008, the city was forced to go after the bond companies to complete work in the second and third phase of the subdivision, including the construction of a reclaimed water plant.

Lawyers representing the two bond companies, along with attorneys from LandMar's parent company, Duke Energy Corp., met city attorneys in March to begin settlement negotiations. In April, the council met in executive session to approve a tentative deal.

Under an agreement with the council last year that allowed it to act as a contract agent for the city, the Hogan Law Firm is set to earn $850,000 — or 25 percent — of the total being collected from the companies.

Council member Emory Pierce said he considers the settlement a win-win for the city.

"Cash in hand is always worth more than a lawsuit," Pierce said. "It's not what we wanted, but it's going to go a long way toward getting things done out there."

City Manager Jenenne Norman-Vacha said the council will have to decide where to appropriate the funds.

The settlement ends the last of four lawsuits the city had with surety bond companies connected with defunct developers.

In a mediated settlement last November, the city collected $251,191 from Bond Safeguard Co. Insurance toward completion of roads and sidewalks in the Cascades subdivision after its developer, Levitt & Sons, filed for bankruptcy. In addition, the bond company agreed to pay $20,000 in legal costs.

Tampa-based CaSHP Homes, which bought the 411-acre subdivision for $2.2 million in August, 2010, agreed to contribute another $30,000 toward the infrastructure.